British energy major BP Plc (BP - Free Report) ’s unit BP Trinidad and Tobago (“BPTT”) has encountered a massive gas deposit at the Savonette field, offshore Trinidad. The gas find has led the company to increase its estimate of resources there by twofold.
BP’s local unit stated that the Savonette-4 appraisal well spud two gas-bearing reservoir intervals, raising the estimates of gas there to 2 trillion cubic feet (Tcf) from 1 Tcf. This represents the largest find by BPTT since 2005.
Located about 80 kilometers off the south-east coast of Trinidad, Savonette-4 appraisal well was drilled to a depth of 18,678 feet in 300 feet of water. The well lies in an earlier unexplored block east of Savonette's original discovery well, Chachalaca. Discovered in 2004, the well came online in 2009. At present, it is flowing gas at 225 million standard cubic feet per day (MMscf/d) and rising up to 250 MMscf/d.
The new gas find at the Savonette-4 well, where BP has a 100% working interest, has encouraged the company to spud two additional development wells into the Savonette reservoir. These two wells are intended to be commissioned over the next one year to eighteen months, if BP hits gas there.
BP’s operations in Trinidad account for over 50% of Trinidad and Tobago’s natural gas yield. BPTT is also one of the leading producers of hydrocarbons in the region. In 2011, BPTT’s average daily production was 408,000 barrels of oil equivalent.
Moreover, BPTT’s staggering investment in the Savonette 4 well and its proposal to drill two other development wells along with the investment in the ocean bottom cable seismic acquisition, reflects its commitment of expanding its Trinidad and Tobago operations.
BP, UK's second largest oil company by market value after Royal Dutch Shell Plc (RDS.A - Free Report) carries a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation.